Around Baseball 2026

[Olerud363.354]

16 hours ago, Laika said:

The teams with less money can't or don't feel like they can put that money on the books down the line 

Team isn't putting money on the books down the line.  They put the money in year to year in an safe investment that will mature at the right amount when it is due.  It's basically just bond trading.  Still an advantage for rich team, because poor team doesn't want to risk bond prices going up.  At least that is my understanding.  Actually curious what kind of loop holes there are.  Like can the Dodgers invest in municipal bonds?  Can the Blue Jays invest in Canadian bonds?  What are the rules for the  escrow account ?  

30 minutes ago, Jimcanuck said:

The Dodgers will pay roughly 470 million.  The rest of the 700 million will be paid by interest earned on investments.

We don't know what the Dodgers will pay for Ohtani's contract because we don't know what interest will be year to year. 

 

[mphenhef]

1 hour ago, Stangstag said:

Answer me one thing, how much money is Ohtani actually receiving from the Dodgers by the time his contract is over and paid?

If I gave you a million dollars today or a million in 20 years, which would be worth more?  They aren't the same despite being the same amount.

[Terminator]

1 hour ago, Stangstag said:

Answer me one thing, how much money is Ohtani actually receiving from the Dodgers by the time his contract is over and paid?

He’s receiving 460 million in today’s dollars

[Jimcanuck]

52 minutes ago, Olerud363.354 said:

We don't know what the Dodgers will pay for Ohtani's contract because we don't know what interest will be year to year. 

 

That's why I said "roughly"

[John_Havok]

17 hours ago, Terminator said:

The Dodgers literally have to take the 46 million a year and put it in an escrow account that they can't touch though. I swear MLB thought of every possible loophole and closed it.

 

This doesn't change the reality that the Pirates cant take those same financial risks with multiple players. 

1 player... sure, but even then they could never do a near 500 million dollar present value deal like the Dodgers did with Ohtani, let alone the next 5 players they also deferred money for. To say that every team has the exact same resources available to defer money, and take the financial risks associated with deferrals is just not accurate. That's where the deferral system favours the Dodgers. Their downside risk is virtually 0. 

[Olerud363.354]

33 minutes ago, Jimcanuck said:

That's why I said "roughly"

10 year rate in the US is down from about 5% to 4% since Ohtani signed the contract.  So contract is already probably gone from 460 million or so to over 500 million...  Not that I actually know how they invest the money.  Maybe they bought ultra funds 3x silver with it and have a few billion already. 

[Jimcanuck]

10 minutes ago, John_Havok said:

This doesn't change the reality that the Pirates cant take those same financial risks with multiple players. 

1 player... sure, but even then they could never do a near 500 million dollar present value deal like the Dodgers did with Ohtani, let alone the next 5 players they also deferred money for. To say that every team has the exact same resources available to defer money, and take the financial risks associated with deferrals is just not accurate. That's where the deferral system favours the Dodgers. Their downside risk is virtually 0. 

Its still just a financial capacity disparity.  Nothing to do with deferrals.

The Pirates were in on Okamoto, apparently.  If he had in fact signed with them, it would be in the Pirates interest to defer some of the salary.

[Jimcanuck]

4 minutes ago, Olerud363.354 said:

10 year rate in the US is down from about 5% to 4% since Ohtani signed the contract.  So contract is already probably gone from 460 million or so to over 500 million...  Not that I actually know how they invest the money.  Maybe they bought ultra funds 3x silver with it and have a few billion already. 

Short term fluctuations mean nothing to a long term investment.

Having said that, my own opinion is increasing disruptions from climate change over the duration of the Ohtani deal will cause inflationary pressure = higher interest rates.

[Terminator]

6 minutes ago, Olerud363.354 said:

10 year rate in the US is down from about 5% to 4% since Ohtani signed the contract.  So contract is already probably gone from 460 million or so to over 500 million...  Not that I actually know how they invest the money.  Maybe they bought ultra funds 3x silver with it and have a few billion already. 

You're technically right with this "we don't know exactly how much he'll get" due to the uncertainty regarding inflation, but let's not confuse the issue any further than it already is.

We need to get these highly regarded financial illiterates on the board to understand the bare basics first, that way they can at least go to their boss and try to get a 3% cost of living wage increase each year. 

[Terminator]

3 minutes ago, Jimcanuck said:

Short term fluctuations mean nothing to a long term investment.

Having said that, my own opinion is increasing disruptions from climate change over the duration of the Ohtani deal will cause inflationary pressure = higher interest rates.

Reported for politics

Deserves a lifetime ban for repeated violations

[John_Havok]

3 minutes ago, Jimcanuck said:

Its still just a financial capacity disparity.  Nothing to do with deferrals.

The Pirates were in on Okamoto, apparently.  If he had in fact signed with them, it would be in the Pirates interest to defer some of the salary.

This is the core of my argument Jim. The financial capacity disparity allows the rich teams to use and take advantage of the benefits of the deferral system (as it is) more than the those without the financial resources. 

It's excellent that the Dodgers, Jays and large spending teams use the system as it's designed. It's a shame the lower spending teams cannot since it was them the system was designed to assist. 

[Olerud363.354]

11 minutes ago, John_Havok said:

o say that every team has the exact same resources available to defer money, and take the financial risks associated with deferrals is just not accurate. That's where the deferral system favours the Dodgers. Their downside risk is virtually 0. 

Partly true I guess.  I don't think the Dodger's downside risk is 0.   The present day value of the contract is not fixed.    Not to get political but if Trump get's his way with the U.S. Federal reserve the present day of that contract, which was about 460 when it was signed, could be 600 million before long. 

Other teams probably are not comfortable playing the bond market.   

How does this work for CBT?  I assume they have to redo it every year. 

[Terminator]

9 minutes ago, John_Havok said:

This is the core of my argument Jim. The financial capacity disparity allows the rich teams to use and take advantage of the benefits of the deferral system (as it is) more than the those without the financial resources. 

It's excellent that the Dodgers, Jays and large spending teams use the system as it's designed. It's a shame the lower spending teams cannot since it was them the system was designed to assist. 

You keep pointing to supposed benefits and risks associated with deferrals, what specifically are these benefits and risks? You can probably point to something, but they are probably small risks for both player and the team. And in any event, that is A LOT different than caveman redditors who don't understand inflation at all and think the Dodgers are cheating the system. 

And even if you are right, the Pirates would actually have to sign someone to a multi-year deal long enough for any of this to even matter. But seeing as Ryan O'Hearn is one of the biggest FA deals in team history, I won't hold my breath.

[Terminator]

1 minute ago, Olerud363.354 said:

Partly true I guess.  I don't think the Dodger's downside risk is 0.   The present day value of the contract is not fixed.    Not to get political but if Trump get's his way with the U.S. Federal reserve the present day of that contract, which was about 460 when it was signed, could be 600 million before long. 

Other teams probably are not comfortable playing the bond market.   

How does this work for CBT?  I assume they have to redo it every year. 

They don't get that into the weeds with it. They use historical trends for inflation and then assign the deal a Net Present Value which is then used for CBT calculations moving forward. The team then has to put that amount of money in escrow.

It's essentially a soft cap, not a hard one, so they just need to get close. The players also don't contractually receive X% of revenues like other leagues do, so again there isn't a huge need to be super precise with it. 

[Olerud363.354]

19 minutes ago, Jimcanuck said:

Short term fluctuations mean nothing to a long term investment.

The 10 year rate is not a short term fluctuation.   It's medium term.  Since Ohtani's deferral is about 10 years the 10 year is probably the most important proxy.  

When he signed the contract 30, 10 and 2 year were all about 5% I think.  Now 30 is still about 5%, 10 year 4%, and 2 year is 3.5%.  

10 year still fluctuates a lot because the crisis that can effect it (bad recessions, pandemic, inflation) play out on a few years time frame. 

[Jimcanuck]

30 minutes ago, John_Havok said:

This is the core of my argument Jim. The financial capacity disparity allows the rich teams to use and take advantage of the benefits of the deferral system (as it is) more than the those without the financial resources. 

It's excellent that the Dodgers, Jays and large spending teams use the system as it's designed. It's a shame the lower spending teams cannot since it was them the system was designed to assist. 

ok i can see a slight advantage, and i say slight because without deferrals, nothing really changes in MLB

[Jimcanuck]

24 minutes ago, Olerud363.354 said:

The 10 year rate is not a short term fluctuation.   It's medium term.  Since Ohtani's deferral is about 10 years the 10 year is probably the most important proxy.  

When he signed the contract 30, 10 and 2 year were all about 5% I think.  Now 30 is still about 5%, 10 year 4%, and 2 year is 3.5%.  

10 year still fluctuates a lot because the crisis that can effect it (bad recessions, pandemic, inflation) play out on a few years time frame. 

Dodgers pay earned deferrals into escrow each year so the year to year rate which fluctuates is what is at play

[Stangstag]

1 hour ago, Terminator said:

He’s receiving 460 million in today’s dollars

How many dollars does he receive in his bank account 

[Jimcanuck]

2 minutes ago, Stangstag said:

How many dollars does he receive in his bank account 

$700 million.   $460 million (or thereabouts) paid by the Dodgers and $240 million in earned interest.

[Stangstag]

3 hours ago, Jimcanuck said:

The Dodgers will pay roughly 470 million.  The rest of the 700 million will be paid by interest earned on investments.

This is a good way to put it. But at the end of the day, Ohtani still gets his 700m hence the 700m contract.

Its debatable whether you think the entire contract should be counted towards the luxury tax, as 99% of contracts in the sport are. I think it should be. 

We will see if it is a point of contention in the next CBA negotiations.

[Terminator]

3 minutes ago, Stangstag said:

How many dollars does he receive in his bank account 

Roughly 460 million in today's dollars will go into his bank account over the course of the contract

[Jimcanuck]

Just now, Stangstag said:

This is a good way to put it. But at the end of the day, Ohtani still gets his 700m hence the 700m contract.

Its debatable whether you think the entire contract should be counted towards the luxury tax, as 99% of contracts in the sport are. I think it should be. 

We will see if it is a point of contention in the next CBA negotiations.

It's normal accounting practice to discount future expenditures to present value.

[Stangstag]

21 minutes ago, Jimcanuck said:

It's normal accounting practice to discount future expenditures to present value.

Yes but this is a sport, and competitive balance is a thing.

[Stangstag]

22 minutes ago, Terminator said:

Roughly 460 million in today's dollars will go into his bank account over the course of the contract

So stubborn lol

[Jimcanuck]

11 minutes ago, Stangstag said:

Yes but this is a sport, and competitive balance is a thing.

You changed the goalposts.  Eliminate deferrals and nothing changes.  Ohtani signs with the Dodgers for $460M without deferrals.  No change to luxury tax calcs.

[Terminator]

Just now, Stangstag said:

So stubborn lol

It’s not stubbornness, it’s just accurate. And dismissing it as stubbornness actually gets to the crux of the problem, which is your failure to understand inflation.

So forget everything else being said. If you understand and accept one basic principle, the confusion disappears:

A dollar today is worth more than a dollar tomorrow.

That’s it.

In the Ohtani example, $460 million today is economically equivalent to $700 million in the future because of inflation and the time value of money. You don’t need to invoke Jim and John's earned interest statements or the supposed strategic advantages and dangers of deferred contracts. Those are rounding errors compared to the fundamental reality that future dollars are discounted dollars.

Simply put, the Dodgers are committing $460 million in today’s dollars whether they pay it now or later. The structure merely changes the timing (which allows Ohtani to avoid CA state income taxes), not the real cost.

I'm now starting to worry about you on a personal level because this basic concept applies just as cleanly to personal finance. If your employer isn’t giving you raises that at least match inflation, you’re taking a pay cut every year. And when you do get a nominal raise, your boss isn’t being generous or rewarding excellence, he’s simply keeping your compensation flat in real terms. He’s paying you the same damn wage, adjusted for inflation. If he's not, then you need to ask and if he refuses, you should find a new job because your boss is cutting your pay each year. 

 

 

[Laika]

ANYWAY

Cubs acquiring Ed Cabrera, Owen Caissie 🍁 apparently is in the deal 

[Laika]

2 minutes ago, Terminator said:

It’s not stubbornness, it’s just accurate. And dismissing it as stubbornness actually gets to the crux of the problem, which is your failure to understand inflation.

So forget everything else being said. If you understand and accept one basic principle, the confusion disappears:

A dollar today is worth more than a dollar tomorrow.

That’s it.

In the Ohtani example, $460 million today is economically equivalent to $700 million in the future because of inflation and the time value of money. You don’t need to invoke Jim and John's earned interest statements or the supposed strategic advantages and dangers of deferred contracts. Those are rounding errors compared to the fundamental reality that future dollars are discounted dollars.

Simply put, the Dodgers are committing $460 million in today’s dollars whether they pay it now or later. The structure merely changes the timing (which allows Ohtani to avoid CA state income taxes), not the real cost.

I'm now starting to worry about you on a personal level because this basic concept applies just as cleanly to personal finance. If your employer isn’t giving you raises that at least match inflation, you’re taking a pay cut every year. And when you do get a nominal raise, your boss isn’t being generous or rewarding excellence, he’s simply keeping your compensation flat in real terms. He’s paying you the same damn wage, adjusted for inflation. If he's not, then you need to ask and if he refuses, you should find a new job because your boss is cutting your pay each year. 

 

 

They should ban deferred money in the next CBA as a marketing thing simply because 90% of fans cannot and will never understand accounting principles or the concept of interest and present day value 

[Terminator]

2 minutes ago, Laika said:

ANYWAY

Cubs acquiring Ed Cabrera, Owen Caissie 🍁 apparently is in the deal 

Yankees whiff on the one guy they've been linked to that actually had fans excited

[Terminator]

1 minute ago, Laika said:

They should ban deferred money in the next CBA as a marketing thing simply because 90% of fans cannot and will never understand accounting principles or the concept of interest and present day value 

Yeah this probably does merit consideration. It actually is a problem and it leads to things like popular sports podcast hosts saying "Can't you just buy championships in that sport?"